Accounting rules
All account heads are classifies in three account head, These are Real Account, Personal Account, Nominal Account. It is helpful for maintain of systematic account. The Institute of charted accountant is a bigger institute of India provided three basic rules for accounting.
Following are description of each rule with exam
1) Real Account
Rule Debit what comes in
Credit what goes out
For Example: Mr. Ram is purchased a motor cycle for the worth of Rs. 20000/-Above example is an applicable real account rule. Following entry is wrote of Mr. Ram in his books of account.
Furniture account Dr
To Cash account Cr
2) Personal Account
Rule Debit the receiver
Credit the giver
For Example: Mr. Ram paid cash to Mr. Vijay for Rs. 5000/-
Above example is an applicable for Personal account. Following entry is wrote of Mr. Ram in his books of accounts.
Mr. Vijay Account Dr
To Cash account Cr
3) Nominal Account
Rule Debit all expenses & Losses
Credit all income & gains
For Example: Mr. Ram paid wages for Rs. 15000/-for business purpose
Above example is an applicable for Nominal account. Following entry is wrote of Mr. Ram in his books of account.
Wages Account Dr
To Cash account Cr
